[UPDATE1: The Washington Post has two articles — a front-page story (“Democrats Take Knife to Budget” and an editorial “Softening the Wish List” — that are quite confused on this point. Both articles also don’t get that Obama’s middle class tax cut is fully paid for by the cap. The WP mistakenly thinks that removing the tax cut from the budget is a deficit-reducing measure congressional Democrats are imposing on Obama. That is just bad political and budgetary analysis, again as I explained here.

UPDATE2: At least one person in the media heard the same press conference I did. E&E News(subs. req’d) ] headlines their story: “Obama makes bold cap-and-trade prediction: ‘We’ll get it done’.“]

President Obama was asked about this in his prime time news conference tonight. He made clear that he remains committed to cap-and-trade and expects to see a bill on his desk (transcript here):

Q: Right now on Capitol Hill, Senate Democrats are writing a budget. And according to press accounts and their own statements, they’re not including the middle-class tax cut that you include in the stimulus, they’re talking about phasing that out, they’re not including the cap- and-trade that you have in your budget, and they’re not including other measures.

I know when you outlined your four priorities over the weekend, a number of these things were not in there. Will you sign a budget if it does not contain a middle-class tax cut, does not contain cap-and- trade?

[As an aside, people don’t seem to get that the middle-class tax cut is entirely paid for by the cap, by the auctioning of CO2 permits. So that is another reason it’s good that cap-and- trade is not in the budget: It means that the tax cut will have to be clearly tied to the cap from both a legislative and messaging perspective — as it should be (see “CBO: Free cap and trade CO2 credits won’t reduce consumer costs“).]

OBAMA: Well, I’ve emphasized repeatedly what I expect out of this budget. I expect that there’s serious efforts at health care reform and that we are driving down costs for families and businesses, and ultimately for the federal and state governments that are going to be broke if we continue on the current path.

I’ve said that we’ve got to have a serious energy policy that frees ourselves from dependence on foreign oil and makes clean energy the profitable kind of energy…..

Now, we never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assume that it has to go through the legislative process. I have not yet seen the final product coming out of the Senate or the House, and we’re in constant conversations with them.

I am confident that the budget we put forward will have those principles in place.

When it comes to the middle-class tax cut, we already had that in the recovery. We know that that’s going to be in place for at least the next two years. We had identified a specific way to pay for it. If Congress has better ideas in terms of how to pay for it, then we’re happy to listen.

Note to Obama: Congress doesn’t have a better idea than paying for the tax cut with the cap.

When it comes to cap-and-trade, the broader principle is that we’ve got to move to a new energy era, and that means moving away from polluting energy sources towards cleaner energy sources. That is a potential engine for economic growth.

I think cap-and-trade is the best way, from my perspective, to achieve some of those gains, because what it does is it starts pricing the pollution that’s being sent into the atmosphere.

The way it’s structured has to take into account regional differences. It has to protect consumers from huge spikes in electricity prices. So there are a lot of technical issues that are going to have to be sorted through.

Our point in the budget is: Let’s get started now. We can’t wait. And my expectation is that the Energy Committees or other relevant committees in both the House and the Senate are going to be moving forward a strong energy package. It will be authorized. We’ll get it done. And I will sign it.

You can perhaps interpret these words more than one way — but I think it is clear that Obama understands that from the perspective of cap-and-trade, the budget is a sideshow. The main event is the energy and other relevant committees in the House and Senate moving forward.

[As an aside, the president, I belive, doesn’t need to sign the budget for it to be controlling authority for Congress.]

10 Responses to Obama says his energy plan and cap-and-trade “will be authorized” even if it’s not in the budget “and I will sign it” — Washington Post confused

The Senate seems damn near useless on so many important issues. It was supposed to be the slower, more deliberative house of the bicameral Congress, but nowadays it’s where so much legislation goes to die.

It makes me wonder how well our U.S. system of government really functions in the modern age, where so many issues demand very rapid attention.

While government taxation policy (or externality fee collection) can change behaviour, we face a world problem. ONLY a market based solution is going to work. In the history of humanity there has never been a Kondratieff cycle (Schumpeter long-wave) that was affected by government mandate.

We need more energy while at the same time we must reduce emissions of CO2. To make the situation more complicated, we need a solution today before we run out of resources (air and fossil fuels). If someone invents cold fusion tomorrow then that is the answer. If not, a fossil-fuel solution is needed.

mankind must adopt a more efficient way of creating energy out of fossil fuels, at least twice as efficient as current methods. This new method must be scalable and CHEAP enough to make it economically advantageous to throw out all of the current thermal energy devices and adopt the new efficient ones.

What I have described is not impossible. For proof look at the innovation of the semi-conductor, the 5th Kondratieff cycle. The cogeneration Reinhardt Turbine offers the same development path in energy production as the semi-conductor did in IT.

So the revenues from the carbon cap won’t go into a dedicated fund to build out transmission lines, phase out pulverized coal plants, etc. — projects needed to reduce CO2 emissions.

Instead, the cap revenues will go right into the general fund to pay for more pork projects, like the bridge to nowhere, or more vote-buying efforts, like ACORN and tax cuts. Environmentalists have been played for fools.

And what about James Hansen calling cap and trade a greenwashing scheme? He surely knows what we are facing with climate change and that this cap and trade stuff will not be enough. It will also lead to people not affording to heat their homes in the winter. Whatever good intentions it begins with, it will dissolve into money-making schemes in a year or two and do nothing about climate change.

The government should not control OR spend the money that will result from capping emissions. This is a plan for ruin and waste and more greed.